Friday May 27, 2016 12:58

(Kitco News) - It's been a tough week for gold and next week's barrage of economic data and Federal Reserve speakers will be closely monitored as the market assesses the chances of a rate hike in June. Prepare for a data heavy week. Markets may be tugged back and forth intra-week with volatile trade, but everyone will be waiting for Friday.

Currently, Gold is heading for its third weekly negative close after prices fell to an eight week low. June Comex gold prices last traded at $1,213.70 an ounce, down $6.70 on the day.

"Rate hike chatter in the U.S. has acted as a headwind to gold over the past few days and continued hawkish commentary could provide some downward pressure on the metal," says Andrew Chanin, CEO of PureFunds, which offers the PureFunds ISE Junior Silver ETF (SILJ).

Here are five factors that could move gold next week. Some are run of the mill, but a few may surprise you.

Jobs data. The big kahuna of the week is the Friday June 3 release of the May U.S. non-farm payrolls data.

Warning: analysts note that although ADP is the first look we get of the labor market but is not a great predictor of Friday’s nonfarm payrolls.

Friday May U.S. jobs data. Trading impact: High.

Jobs data expectations: BNP Paribas forecasts a disappointing payrolls number at 110,000. "We think May payrolls could be weak and if we’re right, this would likely spark concern about the domestic outlook and foil the Fed’s hopes for a mid-year hike," BNP economists said in a GlobalMarkets research note.

Another view:Capital Economics says their econometric model points to a 170,000 non-farm payroll gain. But, allowing for the impact of the Verizon strike and other temporary factors "the actual gain in employment was probably as low as 120,000," the firm said.

Why it matters to gold: Will the Fed get the green light to hike at its June 15 meeting, or will economic data force them to wait until July? Caveat: the Brexit vote is June 23. Could the Fed hold off until July just in case the UK withdraws from the EU, which could trigger a spike in global market volatility?

The U.S. dollar index. Keep an eye on how the dollar reacts to the barrage of economic data this week. Stronger-than-expected data that supports a June rate hike could be dollar-supportive and gold negative.

More Fedspeak. Next week, the Fed’s Dudley (June 2), Brainard (June 3) and Mester (June 4) will be speaking, raising the chances of hearing new color on the timing of a rate hike, Mike Ciccarelli, stock and commodity trader at Briefing.com

Will Long-Term Buyers Emerge To Support Gold? Next week could see long-term gold bulls and short-term gold bears face off in a critical test. Does the news really matter? Technical traders say it is all priced in –and you just have to look at the charts.

The yellow metal is dropping toward key chart support. The $1,207.70 level is critical support for June gold futures. See Figure 1 below for more details. A secondary layer of support is seen at $1,192.10. This zone represents the lower boundary of the consolidation phase that began in February. If key support cracks, it would signal a major near-term chart breakdown and could open the floodgates of selling in the short-term.

Tough week ahead? On a net basis, I’m expecting the week to prove bearish for gold prices, Ciccarelli says. "For now, I’m not bullish on gold. It’s too hard to find catalysts to support a buy right here. My view is, why risk getting long now? I would either sit on the sidelines or get short gold futures at current levels," Ciccarelli says.

Silver shortage ahead? It was mentioned this week by a major silver producer that a foreign electronic producer is looking to lock up future supply by making agreements directly with metal producers, Chanin says. "This is not the first electronic company looking for a stable silver supply, and continued efforts by manufacturing companies to stockpile silver could push an already thin market into a silver shortage."

Big picture: investor interest in precious metals remains high. "We have noticed an increase in activity in our Junior Silver ETF (SILJ) year-over-year in both volume and inflows. Investment demand has potential to put some precious metals in a severe shortage. These potential supply issues could get worse if more negative rate debt is issued making an asset yielding zero, such as precious metals, more desirable by comparison. If economic uncertainty and easy money policies persist, precious metals may be a beneficiary," Chanin explains.

Who's going to the beach? Reminder: US. markets are closed on Monday in observance of the Memorial Day holiday.

Could be a snore: The European Central Bank (ECB) meets June 2, with a press conference. Draghi is expected to reaffirm the bank is in a wait and see mode.

Friday May 27, 2016 12:58

(Kitco News) - It's been a tough week for gold and next week's barrage of economic data and Federal Reserve speakers will be closely monitored as the market assesses the chances of a rate hike in June. Prepare for a data heavy week. Markets may be tugged back and forth intra-week with volatile trade, but everyone will be waiting for Friday.

Currently, Gold is heading for its third weekly negative close after prices fell to an eight week low. June Comex gold prices last traded at $1,213.70 an ounce, down $6.70 on the day.

"Rate hike chatter in the U.S. has acted as a headwind to gold over the past few days and continued hawkish commentary could provide some downward pressure on the metal," says Andrew Chanin, CEO of PureFunds, which offers the PureFunds ISE Junior Silver ETF (SILJ).

Here are five factors that could move gold next week. Some are run of the mill, but a few may surprise you.

Jobs data. The big kahuna of the week is the Friday June 3 release of the May U.S. non-farm payrolls data.

Warning: analysts note that although ADP is the first look we get of the labor market but is not a great predictor of Friday’s nonfarm payrolls.

Friday May U.S. jobs data. Trading impact: High.

Jobs data expectations: BNP Paribas forecasts a disappointing payrolls number at 110,000. "We think May payrolls could be weak and if we’re right, this would likely spark concern about the domestic outlook and foil the Fed’s hopes for a mid-year hike," BNP economists said in a GlobalMarkets research note.

Another view:Capital Economics says their econometric model points to a 170,000 non-farm payroll gain. But, allowing for the impact of the Verizon strike and other temporary factors "the actual gain in employment was probably as low as 120,000," the firm said.

Why it matters to gold: Will the Fed get the green light to hike at its June 15 meeting, or will economic data force them to wait until July? Caveat: the Brexit vote is June 23. Could the Fed hold off until July just in case the UK withdraws from the EU, which could trigger a spike in global market volatility?

The U.S. dollar index. Keep an eye on how the dollar reacts to the barrage of economic data this week. Stronger-than-expected data that supports a June rate hike could be dollar-supportive and gold negative.

More Fedspeak. Next week, the Fed’s Dudley (June 2), Brainard (June 3) and Mester (June 4) will be speaking, raising the chances of hearing new color on the timing of a rate hike, Mike Ciccarelli, stock and commodity trader at Briefing.com

Will Long-Term Buyers Emerge To Support Gold? Next week could see long-term gold bulls and short-term gold bears face off in a critical test. Does the news really matter? Technical traders say it is all priced in –and you just have to look at the charts.

The yellow metal is dropping toward key chart support. The $1,207.70 level is critical support for June gold futures. See Figure 1 below for more details. A secondary layer of support is seen at $1,192.10. This zone represents the lower boundary of the consolidation phase that began in February. If key support cracks, it would signal a major near-term chart breakdown and could open the floodgates of selling in the short-term.

Tough week ahead? On a net basis, I’m expecting the week to prove bearish for gold prices, Ciccarelli says. "For now, I’m not bullish on gold. It’s too hard to find catalysts to support a buy right here. My view is, why risk getting long now? I would either sit on the sidelines or get short gold futures at current levels," Ciccarelli says.

Silver shortage ahead? It was mentioned this week by a major silver producer that a foreign electronic producer is looking to lock up future supply by making agreements directly with metal producers, Chanin says. "This is not the first electronic company looking for a stable silver supply, and continued efforts by manufacturing companies to stockpile silver could push an already thin market into a silver shortage."

Big picture: investor interest in precious metals remains high. "We have noticed an increase in activity in our Junior Silver ETF (SILJ) year-over-year in both volume and inflows. Investment demand has potential to put some precious metals in a severe shortage. These potential supply issues could get worse if more negative rate debt is issued making an asset yielding zero, such as precious metals, more desirable by comparison. If economic uncertainty and easy money policies persist, precious metals may be a beneficiary," Chanin explains.

Who's going to the beach? Reminder: US. markets are closed on Monday in observance of the Memorial Day holiday.

Could be a snore: The European Central Bank (ECB) meets June 2, with a press conference. Draghi is expected to reaffirm the bank is in a wait and see mode.